Day of election results could see action on SGX

On May 16, participants can track the Singapore Exchange (SGX) to price in the impact of the results of the Lok Sabha elections, news of which is expected after regular market hours in India. While Indian markets are open from 9:15 am to 3:30 pm—, SGX is open for about 16 hours and allows investors to take positions on the equity market till about midnight (India time).

The two SGX contracts based on India trading are the SGX CNX Nifty Index Futures and SGX CNX Nifty Index Options trade. In the first session, trading on SGX is open from 6:30 am (India time) to 3:40 pm. The second session of trade is from 4:45 pm to 11:30 pm, according to information on the SGX website.

Brokers have written to stock exchanges as well as the Securities and Exchange Board of India to extend trade timings till 5 pm on May 16 (Friday, the day the election results will be announced). They have also sought an additional session of two and a half hours on May 17 (Saturday), failing which the May 16 session be extended till 6 pm, they urged.

U R Bhat, managing director, Dalton Capital Advisors (India), a registered foreign institutional investor, said a longer trading session would help price in the election results better and avoid large gap-up or gap-down openings on Monday, when the market reopened for trading. “The results will start coming in the morning; the eye will be on whether the Bharatiya Janata Party gets a majority on its own or not. So, participants will be watching the results till the very end. By then, the markets will already be closed here. The trading may shift to SGX,” he said.

Saurabh Mukherjea, chief executive (institutional equities), Ambit Capital, said it was safe to assume a pick-up in trading on SGX, owing to the election results. “One expects outsized volumes on the day of the results; greater interest in India will lead to a spike in volumes on SGX, too,” he said.

In the last three months, the aggregate volume of futures contracts traded on SGX has risen 21.37 per cent. The average number of contracts traded rose from 65,163 in January to 79,092 in April.

However, the difference in trade timings between Singapore and India might create an uneven playing field, Bhat said. “The bigger guys will be able to take a position abroad, but the smaller ones won’t be able to do this,” he said.

Piyush Garg, chief investment officer, ICICI Securities, said not everyone could take advantage of foreign trading venues. “A certain section of the market, the foreign institutions, can take positions on SGX. But that is not feasible for retail investors or domestic institutions,” he said.

Garg said action was expected to pick up pace ahead of the results, too. “Exit polls, due from May 13, will result in market movements…Based on the exit polls, people will try to price in something before May 16,” he said.

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